Note 16. Leases
We have operating leases that primarily consist of real estate, machinery and equipment. As of December 31, 2025, the Company does not have any material finance leases. Our leases have remaining lease terms of up to 12 years, some of which include options to extend the leases for up to two years, and some of which include options to terminate the leases within the year.
The components of lease expense are as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Operating lease cost | $ | 17 | | | $ | 17 | | | $ | 16 | |
| Short-term lease cost | 3 | | | — | | | — | |
| Total lease cost | $ | 20 | | | $ | 17 | | | $ | 16 | |
Supplemental cash flow information related to leases is as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | | |
| Operating cash outflows from operating leases | $ | 17 | | | $ | 33 | | | $ | 13 | |
| Right-of-use assets obtained in exchange for lease obligations: | | | | | |
| Operating leases | $ | 7 | | | $ | 11 | | | $ | 3 | |
| Finance leases | $ | 1 | | | $ | — | | | $ | — | |
Supplemental balance sheet information related to operating leases is as follows:
| | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 |
| (Dollars in millions) |
| Other assets | $ | 49 | | | $ | 52 | |
| Accrued liabilities | 13 | | | 11 | |
| Other liabilities | 38 | | | 42 | |
| | | |
| | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 |
| |
| Weighted-average lease term (in years) | 6.43 | | 6.89 |
| Weighted-average discount rate | 6.25 | % | | 6.71 | % |
Maturities of operating lease liabilities are as follows:
| | | | | |
| Year Ended December 31, 2025 |
| (Dollars in millions) |
| 2026 | $ | 15 | |
| 2027 | 13 | |
| 2028 | 8 | |
| 2029 | 5 | |
| 2030 | 3 | |
| Thereafter | 16 | |
| Total lease payments | 60 | |
| Less imputed interest | (9) | |
| $ | 51 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.